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Payer approaches to providers

Payer approaches to providers

Traditionally many payers have simply paid the bills sent by providers. Across the world, we are now seeing the emergence of activist payers who demand better value and are prepared to take action and reshape the system to ensure they achieve this.

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Payers can also create incentives for providers to create more integrated systems and use bundled payments and information technology to reduce the transaction costs for providers and patients.

There are a number of approaches in use:

Some payers have chosen to ensure providers adhere very closely to treatment guidelines and insist on pre-treatment authorization. This is not an ideal solution as it has high transaction costs and means that payers are managing most of the risk associated with volume

‘Pay for performance’ approaches have become popular and can have a significant impact on compliance with processes. However, there is little evidence this produces the type of systemic improvement required and the costs of operation are significant

A more sustainable approach is a focus on outcomes and population health in which there is more risk sharing with integrated providers able to offer longitudinal care to defined populations

Payers can also create incentives for providers to create more integrated systems and use bundled payments and information technology to reduce the transaction costs for providers and patients

Some large payers, particularly those with a geographical focus, have the ability to reshape the provider system by centralizing specialist care, removing duplication and negotiating lower prices